Black Founders Are Seeing A Decrease In Funding Amid Economic Downturn
Black entrepreneurs saw a dramatic decrease in funding this year as investors continue to pull back.
So far, new Crunchbase data shows Black startups received $324 million in VC funds in the second quarter, a steep decrease from the $1.2 billion received in Q1 this year and substantially below the $866 million the founder cohort raised in Q2 last year.
Overall, Black founders have received more than $1.5 billion in capital this year, compared to the over $2 billion received last year. Funding at all levels is tracking below 2021.
What did last year look like?
Funding to Black entrepreneurs in the U.S. hit nearly $1.8 billion through the first half of 2021 — a more than fourfold increase compared to the same time frame last year.
Led by funding to early-stage startups, 2021’s half-year total surpassed the $1 billion invested in Black founders in all of 2020 and the $1.4 billion invested the year before that.
But Black startup entrepreneurs still received only a tiny fraction — 1.2 percent — of the record $147 billion in venture capital invested in U.S. startups through the first half of this year, Crunchbase numbers show.
That compares with the more than 13 percent of the U.S. population that is Black or African American.
Why could there be a decline in funding in 2022?
Of course, the economic downturn plays a part.
But recently, we explored whether the promises made by Big Tech were simply performative.
George Floyd, 46, died May 25, 2020, after Derek Chauvin, who is white, pinned him to the ground with a knee on his neck as the victim repeatedly said he could not breathe.
Chauvin pleaded guilty last year to a federal charge of violating Floyd’s civil rights and faces a federal sentence ranging from 20 to 25 years. He was also convicted for the murder of Floyd.
Within weeks of the killing, the tech industry began to respond to the racial inequality in the U.S. By June 2020, more than 200 tech companies had reportedly made formal statements about Floyd.
They promised changes such as investing in equity and justice-focused organizations, improving diversity training, and hiring more Black talent.
Some made a big show of donating loads of money to social justice efforts and quickly ramped up and publicized their efforts.
It’s been two years, and the proof is always in the pudding—and we haven’t seen much pudding.
Since 2020 many large tech companies haven’t reported any actual specifics about how their actions produced better outcomes for the Black community.
